Limitations of Year-to-Year Change Analysis Assignment Help

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LIMITATIONS

Year-to-Year change analysis tends to be highly unreliable because of the following reasons:

  • Year-to-year changes could be due to chance, rather than the impact of changes in policies and practices.

  • Year-to-Year changes could be due to seasonal variations which are purely short-term and can distort long-run predictions.

  • Year-to-Year changes could be due to cyclical fluctuations which may cause misinterpretation.

  • Increase/decrease in change i.e., in performance/sales happens as a result of continuous, incremental improvement over a period of time and is not simply a one-year phenomenon.

For these reasons, the use of Year-to-Year analysis is limited in practice and trend statements is preferred for time series analysis.

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